Correlation Between First Advantage and GXO Logistics
Can any of the company-specific risk be diversified away by investing in both First Advantage and GXO Logistics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Advantage and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Advantage Corp and GXO Logistics, you can compare the effects of market volatilities on First Advantage and GXO Logistics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Advantage with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and GXO Logistics.
Diversification Opportunities for First Advantage and GXO Logistics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and GXO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and First Advantage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Advantage Corp are associated (or correlated) with GXO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXO Logistics has no effect on the direction of First Advantage i.e., First Advantage and GXO Logistics go up and down completely randomly.
Pair Corralation between First Advantage and GXO Logistics
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 1.27 times more return on investment than GXO Logistics. However, First Advantage is 1.27 times more volatile than GXO Logistics. It trades about 0.17 of its potential returns per unit of risk. GXO Logistics is currently generating about 0.0 per unit of risk. If you would invest 1,754 in First Advantage Corp on August 27, 2024 and sell it today you would earn a total of 156.00 from holding First Advantage Corp or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. GXO Logistics
Performance |
| Timeline |
| First Advantage Corp |
| GXO Logistics |
First Advantage and GXO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and GXO Logistics
The main advantage of trading using opposite First Advantage and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, GXO Logistics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GXO Logistics will offset losses from the drop in GXO Logistics' long position.| First Advantage vs. Discount Print USA | First Advantage vs. Cass Information Systems | First Advantage vs. Civeo Corp | First Advantage vs. Network 1 Technologies |
| GXO Logistics vs. Forward Air | GXO Logistics vs. Landstar System | GXO Logistics vs. JB Hunt Transport | GXO Logistics vs. Expeditors International of |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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